Schwarzenegger Releases Revised Health Care Reform Proposal

CAL/AAEM News Service calaaem_news at yahoo.com
Sat Oct 13 11:09:48 PDT 2007


Schwarzenegger Releases Revised Health Care Reform Proposal

Source: California Healthline ( http://www.californiahealthline.org )
Date: October 10, 2007

 
On Tuesday, Gov. Arnold Schwarzenegger (R) released legislative language for a revised
health care reform proposal that would be partially funded by leasing the state lottery
system to a private group, the Sacramento Business Journal reports (Robertson, Sacramento
Business Journal, 10/9). 

The new plan, called the Health Care Security and Cost Reduction Act, still would require
all California residents to obtain health insurance (Vesely, Modern Healthcare, 10/9).

The language reflects feedback from more than 1,000 meetings the governor and his
advisers held with industry stakeholders since he first presented the plan in January
(Sacramento Business Journal, 10/9). 

Compared to the original plan, the revised version contains several concessions aimed at
winning support from opposing groups, including labor unions, physicians and small
businesses (Rau, Los Angeles Times, 10/10). 

Physicians no longer would be required to contribute 2% of revenue to help finance the
proposal (Rojas, Sacramento Bee, 10/10).

Employer Contributions

For employers, the revised plan would require: 

-No contributions if payrolls do not exceed $100,000; 
-Contributions equal to 2% of payroll if payrolls range from $100,000 to $200,000; and 
-4% contributions if payrolls exceed $200,000.

Health Insurance Subsidies 

Schwarzenegger's plan also would provide health insurance subsidies based on the federal
poverty level: 

- Families with incomes that do not exceed 150% of the poverty level will receive full
subsidized health care coverage; 
- Families with incomes that fall between 150% and 200% of the poverty level would pay no
more than 4% of income on premiums; and 
- Families with incomes that range between 200% and 250% of the poverty level would pay a
maximum of 5% on premiums (Herdt, Ventura County Star [1], 10/10).

Lottery Revenue

Schwarzenegger said he wants to lease the state lottery to a private group and use about
$2 billion annually of the proceeds to help pay for health care expansion. 

According to the governor's finance aides, a private management company would pay $37
billion for a 40-year lease. The state would use the money to create an annuity of $2
billion annually for the health reform plan. 

Education, which currently receives about $1.1 billion annually from the lottery, would
be unaffected. The state would replace that funding with money from the state general
fund.

The San Jose Mercury News reports that the lottery funding stream for health care would
expire within 15 to 25 years, at which point the state would have to find money to
replace it. It is also unknown whether the fund would keep up with rising health care
costs, according to the Mercury News. 

All financing for the governor's plan, including leasing the lottery, would have to be
approved by voters unless the plan wins two-thirds support from the Legislature (Zapler,
San Jose Mercury News, 10/9). 

However, the Mercury News reports that leasing the lottery would let Schwarzenegger avoid
asking voters to raise the state sales tax to pay for his plan, a move that could be
risky (San Jose Mercury News, 10/9).

Next Steps

Sabrina Lockhart, spokesperson for the governor, said it is now up to the Legislature to
introduce Schwarzenegger's bill and schedule hearings and action (Sacramento Business
Journal, 10/10). 

Schwarzenegger said, "This is our proposal." He added, "These are not the final numbers.
A lot of this stuff is still being negotiated." However, the governor said, "I'm looking
forward to getting this health care plan wrapped up within two weeks" (Ventura County
Star, 10/10). 

Democratic legislative leaders, however, signaled that they continue to favor their own
health care reform proposal, which would be financed largely through employer
contributions (Los Angeles Times, 10/10). 

Assembly Speaker Fabian Núñez (D-Los Angeles) said, "I have been strongly committed to
ensuring affordability, and I will be examining the governor's bill in that light, along
with how it addresses prescription drugs for Californians and fair participation by
employers" (Chorneau, San Francisco Chronicle, 10/10). 

To place an initiative on the November 2008 ballot, the language likely would have to be
submitted to the attorney general sometime next month (Ventura County Star, 10/10).

Reaction

Bill Dombrowski, president and CEO of the California Retailers Association, said, "We
believe today's proposal has the potential to drive down costs and provide more options
for access to health care services." He added, "We are also pleased that the proposal
continues to call for shared responsibility and does not place the financial burden
solely on employers" (Sacramento Business Journal, 10/9). 

Republican leaders indicated that they still objected to requiring employers to
contribute toward health care coverage. 

Assembly Minority Leader Mike Villines (R-Clovis) called on the Legislature to oppose the
plan's mandates and tax increases (Ainsworth, San Diego Union-Tribune, 10/10). 

Jerry Flanagan, founder of the Foundation for Taxpayer and Consumer Rights, said,
"Individuals, workers and families would pay more for health care than ever without any
caps on what the insurers can charge." He added, "This is a sop to the insurance
companies and a time bomb for the middle class" (Foundation for Taxpayer and Consumer
Rights release, 10/9). 

Art Pulaski, executive secretary-treasurer of the California Labor Federation, called the
proposal "an enormous step backward." Pulaski added that Schwarzenegger "has opted to
ignore the (Democrats') wildly popular bill, which is currently awaiting his signature,
in favor of his own unpopular and regressive plan." 

Anthony Wright, director of Health Access California, a statewide health care consumer
advocacy coalition, expressed concern that the governor's plan no longer defines minimum
insurance benefits. Instead, the Secretary of the Health and Human Services Agency would
use the regulatory process to establish a minimum benefit level governing coverage for
medical, hospital, preventive care and prescription services (Sacramento Bee, 10/10).

Opinion Piece

Funding health care reform with proceeds from a lease on the lottery "seems a desperate
idea" because "salvaging health care reform" in California "appears to have become a
desperate cause," Timm Herdt, chief of the Star's capitol bureau, writes in his column. 

"There are a whole bunch of questions to be answered in a few short weeks," Herdt writes,
noting that chances of that happening are "[b]etter than hitting the lottery, perhaps,
but not that much better" (Herdt, Ventura County Star [2], 10/10).

Broadcast Coverage 

Video of the governor's announcement is available on his Web site.

Capital Public Radio's "KXJZ News" on Wednesday reported on Schwarzenegger's revised
proposal. The segment includes comments from Schwarzenegger (Russ, "KXJZ News," Capital
Public Radio, 10/10).

A transcript and audio of the segment are available online. 

Readers are invited to send feedback to: chl at chcf.org


For more information, please visit:
http://www.californiahealthline.org/articles/2007/10/10/Schwarzenegger-Releases-Revised-Health-Care-Reform-Proposal.aspx?topicID=37



Abid Mogannam &
Brian Potts MD, MBA
Managing Editors, CAL/AAEM News Service
University of California, Irvine

The CAL/AAEM Archives are available at: http://maillists.uci.edu/mailman/public/calaaem/



       
____________________________________________________________________________________
Boardwalk for $500? In 2007? Ha! Play Monopoly Here and Now (it's updated for today's economy) at Yahoo! Games.
http://get.games.yahoo.com/proddesc?gamekey=monopolyherenow  


More information about the CALAAEM mailing list